Trees as crops paying off Forestry: When Weyerhaeuser Co. officials look at stands of trees planted 30 years ago, they know that increased profits are coming, and that their company's move to high-yield forestry was a wise one.


Most people of a gambling nature wouldn't make a bet that required 40 years to learn if there's a payoff.

Weyerhaeuser Co. did.

In 1966, the company decided to convert its timberlands in the Pacific Northwest and the South to a then-untested concept known as "high-yield forestry." The idea was to manage trees much like an agricultural crop, and not to leave forests to nature and chance.

"Thirty years later, we're beginning to see these stands in their more mature form and what they're going to look like," said William Corbin, Weyerhaeuser's executive vice president for timberlands and distribution.

What it looks like is that the bet is paying off. At Weyerhaeuser's most recent annual shareholders meeting, the company promised investors they will begin to see the results of high-yield forestry in the next five years, starting in the South, then moving into the Pacific Northwest in the next decade.

By the year 2020, Weyerhaeuser executives said, high-yield forestry will mean a 70 percent increase in yields per acre in the South from current harvest levels and a 25 percent increase in the Pacific Northwest.

But high-yield forestry means more than just more wood. Weyerhaeuser deliberately chose to emphasize the production of "appearance-grade lumber" -- the knot-free wood used in window trim, doors, moldings and furniture.

And that wood will be hitting the market just as the traditional source of appearance-grade wood -- old-growth logs -- will have been placed off-limits.

That timing, Corbin said, is "a credit to those visionary people for staying the course."

It's also a bit of luck, for in 1966 it wasn't possible to predict the tumultuous public policy dispute more than two decades later that would sharply curtail logging in old-growth federal forests.

But most business success is a combination of design and luck, and whatever the source in Weyerhaeuser's case, "They're five to 10 years ahead of the average company in the industry," said Evadna Lynn, a forest products stock analyst with Dean Witter Reynolds in New York.

Greater impact

The impact of high-yield forestry is likely to be far greater for the Federal Way-based Weyerhaeuser than for the industry as a whole. High-yield forestry's adoption by the rest of the industry has been piecemeal, and the "wall of wood" the technique produces is likely to be counterbalanced by the reduced level of harvest on public lands.

Still, "a lot of people are waiting to see how it turns out," said Rick Holley, president of Plum Creek Timber Co., another major Washington timberland owner that has recently moved into the South.

Many companies now have plantation forests that contain a single species of tree. But Weyerhaeuser takes pains to differentiate what it does from the others.

"Plantation forestry is widespread in the industry," Corbin said. "What we call high-yield forestry is not widespread in our industry."

What constitutes high-yield forestry?

Genetically selecting and engineering seedlings for such characteristics as hardiness, disease resistance and strength. Weyerhaeuser now claims a 90 percent survival rate for its nursery-grown seedlings, compared with about 65 percent in the early days.

Studying the soil on Weyerhaeuser's timberlands for water-holding characteristics, nutrients and other properties, and selecting seedlings appropriate for those soils, as well as for elevation and climate, and fertilizing the soil and trees by helicopter.

Thinning tree stands twice, once at 12 to 14 years and again at 25 years, to give trees more space and light to grow. Weyerhaeuser might plant 400 trees per acre and at final harvest cut 250 trees per acre.

Pruning branches off the first 18 feet of a tree in its first 20 years to minimize knots in the wood.

Weyerhaeuser estimates that it gets more than twice as much marketable wood per acre from a high-yield approach that it does from an unmanaged forest. But the aim is not just to produce a lot of wood, but to produce quality wood.

"We had a focus that the value was in saw logs, that there was more value in softwood than hardwood, that there was more value in appearance than structural wood," Corbin said. Weyerhaeuser opted to manage its forests for saw-log production and high-quality saw logs.

High-yield forestry officially got its birth in Weyerhaeuser at a board meeting in October 1966, when directors approved the idea of dramatically boosting production from the company's Douglas fir forests in the West and loblolly pine forests in the South.

Many of the decisions seem obvious now, but they weren't uncomplicated. Even a relatively simple step like pruning adds up to a lot of money with no payoff for three or four decades, not to mention the cost of tree nurseries and research laboratories.

Given the growing cycles of 50 years in the West and 30 years in the South -- and spending money today on pruning that won't earn a return for 15 to 20 years -- "one could argue there are shorter-run investments" with a more assured return, Corbin said.

But the return is coming. By 2005, Weyerhaeuser should see "substantial volumes" off its high-yield forests in the South, followed by similar volumes about five years later in the West, Corbin said.

Growing the wood is half the battle. Selling it is the other half. Corbin said Weyerhaeuser is importing appearance woods from Brazil, Chile and New Zealand, both for research and for sales, in preparation for the day when it has much more appearance-grade wood for sale.

"We're taking wood from around the world and analyzing it for machinability," he said. "We're learning a lot about the physical properties."

Weyerhaeuser also is investing in sawmills that can handle the different types of wood.

The financial impact of high-yield forestry on Weyerhaeuser is hard to quantify because it depends on market prices at the time products are sold, but it definitely will make a difference to the company.

Dean Witter's Lynn said increased production in Southern pulpwood will enable Weyerhaeuser to reduce the amount of pulp it buys on the open market. When the increase in lumber occurs, she said, Weyerhaeuser will have more flexibility either to raise capacity levels in the United States or perhaps establish facilities in international markets.

Enhancing the cost position

"The result will be the company's ability to generate higher volumes off existing lands and increase market share and cash flow," said Robert Toomey, an analyst with Piper Jaffray Inc. in Seattle.

"It enhances their cost position, particularly if we have pressure on the timber supply of North America."

It's actually a little easier to determine what will happen to the overall lumber market as Weyerhaeuser and other companies start increasing their production: Not a lot.

There isn't going to be a "wall of wood" that swamps the markets and disrupts prices. What increased production there is will find a ready market as domestic and world demand for wood continues to grow. Increased volumes of wood from private timberlands will balance reduced harvests on public lands.

Pub Date: 12/31/96

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